The digital scramble

— Global

Preface

In the rush into digitalisation, US media giants hastily abandoned many of their core values, says the veteran journalist and former foreign editor of the ‘Chicago Tribune’. Elsewhere, old-fashioned values are thriving. We meet the players with successful business models.

47

October 2011

One thing I’ve always loved about a newspaper – the black ink on newsprint – is the serendipity, the chance of being informed of some delicious turn of events, delighted by some aspect of civilisation, or perhaps an appreciation of an unknown person or group. I love the chance to learn and be surprised when I turn the page.

I understand that I can achieve the same result online, that the internet gives me infinitely more choice than the broadsheet pages of even the thickest newspaper. I’m not a dinosaur. Well, maybe I am, but I believe there is a real distinction between the values of old media and the unfulfilled expectations of new media.

What has changed in this rush of mass-market media to embrace the web and the tablet is not just the delivery system. The industry lemmings have shown a profound uninterest in providing quality and, if it doesn’t sound too arch, inspiration. Instead of recalibrating, many just retrenched, afraid perhaps that their traditional consumers had gone stupid.

I’m partly responsible for old media’s apparent demise, of course. I still read newspapers in print form, but I also check Google News and online news websites. A few years ago, instead of buying CDs, I began downloading music. I started ordering books from amazon.com because it was cheaper than bookshops.

It was a slippery slope. Recently, I began reading books on my new Kindle. My responsibility goes beyond the printed word. I essentially gave up renting DVDs from the Tower Records store at the end of my block in Chicago when I signed up for Netflix. Usually I was content to wait two days for the desired DVD to be delivered in the mail; now I no longer wait for the mail, but just stream Netflix and other movies on my iPad2.

Eventually, Tower Records closed in London and the whole enterprise went bankrupt; it couldn’t compete with music-sharing programs such as Napster and later Apple’s digital behemoth, iTunes.

Last year, my local Barnes & Noble bookstore closed and three months ago the Borders bookstore that was across the street closed as well. Each time, the most experienced salespeople, and the most informed, seemed to be the first to go.

Many American media outlets learned too late that they could no longer pretend to be all things to all people. They should have been looking at strengthening the core of their businesses rather than trying to compete with discount places and the endless opportunistic offers from the internet. Access to information and media products became ubiquitous and fast and the publishers grew wary that they would not be able to compete in the same way.

American media has been struggling to adjust to a digital world for more than a decade. With blinding arrogance, publishers first failed to embrace the new technology and then they over-corrected, succumbing to the idea that the masses only want to be entertained in short bursts – a news flash, a celebrity photo, a new dieting tip.

With readership of newspapers in steady decline (actually it had been since the 1950s) and, more importantly, paid advertising in freefall, the publishers finally turned to the internet and pretended that was the only future imaginable. Tweet it, post it on Facebook and, tah-dah! you’re back into profitability.

They figured the new business model, with its website as a primary force, would allow them to cut back on staff and newsprint. Instead of reporters and editors, they hired “producers”, usually young and underpaid, who were knowledgeable about “search engine optimisation” and could easily cut and paste articles to fit any platform.

And, in the US at least, the mantra was that all news had to be “local, local, local”. Such thinking played well in a country with a long-established isolationist streak.

It also played well with publishers who wanted to save money and who hired consultants to “rethink” their business models; really just a way of saying: look for ways to cut. Those bottom-line consultants urged people to work harder and more carefully so fewer editors were needed. Taking aim at high newsgathering costs, they said that readers got foreign news from television and the internet, so why do we need that in the paper? And when attention shifts entirely to the internet, the focus is on production and the number of page views, and that always leads to more celebrity coverage and more focus on crime.

But enough with the doomsaying. I believe that Quality Will Out and that much of what has been lost will eventually reappear, albeit in a different form. Perhaps it’s the nature of media (and media critics) to be short-sighted, but I believe there is a basic, never-ending hunger from consumers to trust quality and truth whether it’s in news, magazines, TV or the sales of CDs, DVDs and, importantly, books.

Casting a glance away from the largest and now-defunct models that have been trotted out in recent years, there are small bookstores, record stores and chains, alternative weeklies and small daily newspapers that have thrived, albeit perhaps with some minor tweaks to their business. They were able to weather the digital storm by emphasising the quality of what they sell and keeping knowledgeable staff.

After spending more than three decades as a correspondent and editor in daily newspapers, I try to reassure my journalism students that regardless of their current job prospects, people will seek out good reporting and writing. We are in a transition period, but there are signs that a new competition is happening.

While other mass-circulation papers cut and closed, Bill Keller, the former editor of The New York Times famously declared that the paper was not going to reduce its coverage and staff for the sake of Wall Street profits. Even if all other news organisations failed, he wanted the Times to be “the last one standing”.

My former newspaper, the Chicago Tribune, went through its own quick fix of trying to cost-cut its way back to profitability. A new management team (new to the newspaper industry too) came in prophesising that the old ways were dead before cutting the editorial staff in half and reducing space on the broadsheet for news. After filing for bankruptcy shortly thereafter, the Tribune has since altered course in recent months by adding more pages because readers were telling them they wanted more heft to the news report.

There is no question that we are still in transition. Perhaps the pendulum is swinging back now or perhaps it hasn’t even finished its first swing yet. Not just in newspapers but in almost all media. Some papers are discovering that those likely to quit their newspaper habit have already done so, and those who remain are willing to pay a bit more. The tastes of informed consumers do shift, but they are more a matter of degree than tectonic changes.

In the rush to digital, some thought that their customers only wanted to skim the news. That’s undoubtedly true for many, but there is and always has been a more patient consumer base that will keep up sales for some publications.

What I hope to see in the future isn’t a quaint record or video shop, nor an antiquarian bookstore on every corner. But what I see in other countries, in the shops of Berlin and Tokyo, in the small and growing newspapers in Kenya and Mumbai, and even in the internet cafés of Shanghai, is a commitment to free expression and a good product.

Many publishers went off-track in thinking we all just wanted something cheap and entertaining. They thought we lacked the judgment or didn’t care about what we were reading or listening to as long as it was online. I’m still willing to pay to get four newspapers delivered to my door. I know I’m unusual in that. I’m also willing to pay Pandora $36 (€25) a year to provide unlimited, quality music programming over my computer.

I don’t think CDs and DVDs are coming back in any significant way, but I don’t believe for a minute that newspapers and books are going to disappear. They are tangible objects of our commitment and I expect them to be around no matter how many electronic bits are floating through the atmosphere. The value I see is not in circular discs of plastic and folded or bound pages of paper so much as the quality they once represented, and I hope they will again.

01 THE NEWSPAPER

Dagens Næringsliv - Oslo, Norway

In a small but savvy market, Norway’s best-read quality daily innovates in digital while keeping paper close to its heart.

Norway’s leading financial daily is a rare beast in today’s media climate. It invests in expensive quality journalism in print instead of bite-sized news on the internet – and the strategy is paying off. Walking through Dagens Næringsliv’s offices on Oslo’s Christian Kroghs street is an impressive experience. Floor-to-ceiling windows open towards an eighth-floor view of the Oslo fjord, the city and the government buildings that were damaged in July’s terror attack.

For the past month, DN has been covering the attacks – perhaps an unusual story for a financial paper. But then again, DN is unusual. Established in 1889 and owned by NHST Media Group, it’s a highly successful paper in a country with tough media competition and an audience that loves its newspapers. While many newspapers home and abroad have been cutting back to save money in a shrinking market, DN is doing the opposite. Last year, it was one of the few papers in Norway to grow – average circulation is now 80,000 – and it made a profit of NOK75m (€9.6m).

Covering stories that might not have much to do with the economy is part of the strategy. “Our strategy is to take our journalism to new areas – but always with the basis in investigating power and money,” says editor-in-chief and publisher Amund Djuve.

One area DN has started to increase its coverage of is culture. Recently, the paper revealed that the Norwegian artist Odd Nerdrum was engaged in tax fraud, a case that led to the artist being imprisoned. Long, investigative features, published in the Saturday supplement Magasinet, are the paper’s trademark. Thanks to them, Saturday has become DN’s most successful day. “People say that you can’t make money on investigative journalism, but we do,” says editor Gry Egenes, who is responsible for Magasinet.

She believes the paper’s readers – who are among the best-educated in Norway – don’t find this type of journalism in many other places. “Most other magazines write about lifestyle tips and celebrities. We try to cover the stories that others don’t. And we work a lot on our storytelling,” she says.

While DN believes in print, it doesn’t want to miss out on business opportunities in the digital arena. It has an online news team, producing independent stories, and an iPad version of the paper and Magasinet is in the works. Djuve has no illusions about making money on the iPad edition anytime soon – but he wants to provide readers with a tablet version, as many of them are early adopters. “In the future, maybe DN will mainly be read on tablets, but there’s still many years to go,” he says.

Right now, the paper’s print version is still going strong – the paper expects to add up to 3,000 new readers this year. “Our readers still love newspapers, and we’re very thankful,” says Egenes.

Circulation: Norwegian papers

1. Aftenposten 239,831

2. VG 233,292

3. Aften 105,012

4. Dagbladet 98,130

5. Dagens Næringsliv 80,559

02 THE MAGAZINE

Tehelka - New Delhi, India

The Indian weekly news magazine’s investigative pedigree ensures the boom never goes unchecked.

Indian investigative magazine Tehelka has gone through a few incarnations in its short life. Launched as a website in 2000, it was reborn as a newspaper, then evolved into a weekly magazine in line with what readers wanted. It’s now one of many crowding Indian newsstands.

Throughout, its focus has remained the same: exposing the inner workings of government and business through rigorous research and undercover reporting. The story that put it on the map was in 2001 when Tehelka journalists posed as arms dealers and exposed bribe-taking and corruption in government defence contracts.

“It led to the resignations of politicians, but also led to our closure,” says Tehelka founder Tarun Tejpal. “It’s been a struggle to bring it back. We went from 120 employees to one.”

After doggedly working to revive Tehelka, Tejpal was named one of India’s 50 most powerful people by BusinessWeek magazine in 2009. He puts Tehelka’s national weekly circulation at anywhere between 60,000 and 100,000 copies, depending on the cover. While well below its main competitors, Tejpal points out it’s the calibre of readers that matters.

“Our main targets are the decision makers, the opinion makers, the political class. In a country of 1.2 billion people, even 200,000 is a drop in the ocean. So if you can influence the business of critical thinking in India, that has more impact.” The magazine’s evolution from a website to print publication is at odds with what is happening elsewhere in the world, but for India it makes sense.

The country might be known for its IT brainpower, but internet penetration is relatively low and accessible only by a certain socio-economic class. “The ruling class in India aren’t reading online – they’re reading print. This is because there’s a techno-progression that hasn’t arrived yet,” says Tejpal. “Politicians here aren’t of the Obama mould; they’re not net-savvy, they’re very grassroots. To access that class, it’s very important to have a physical product.”

“Tehelka is fearless, and doesn’t have an axe to grind,” says media commentator Vanita Kohli-Khandekar. “It also pushes up standards, which is a very good function.”

Then there is the matter of lan­guage. The fact that India’s print market is booming has been well-publicised. What is not immediately apparent is that much of that growth is in Hindi and regional languages, while English publishing is stagnating. “There are relatively few English speakers, just around 120 million, so ultimately it’s a smaller market,” says Kohli-Khandekar. “Hindi speakers are more like 500 million.”

As a result, Tehelka also puts out a Hindi edition each fortnight, the bulk of it fresh content. “Hindi readers are different – they’re very connected to the issues,” says Tejpal.

Why it works

1. Circulation: between 60,000 and 100,000 per week

2. Main competitors: India Today, Outlook, The Week, Open

3. Indian newspaper circulation: 110 million newspapers each day across the country

4. Staff: About 200 across India, including 90 journalists

5. Typical front pages: Recent cover stories include: an exposé of the 2G spectrum allocation scam, one of India’s biggest recent corruption scandals; a profile of Indian Mujahideen, the outfit believed responsible for July’s bomb blasts in Mumbai; and a story on the government-business nexus in illegal mining in the state of Karnataka.

03 THE BOOK SELLER

Thalia Pocket Shop - Germany

Proving that the airport novel needn’t be an “airport novel”.

At a time when everybody in the book industry seems to speak about digitalisation and when major US chains are closing, Germany’s biggest book retailer, Thalia, is going in the opposite direction: it’s starting a new chain of shops. In collaboration with Swedish book chain Pocket Shop, Thalia plans to open up to 15 outlets in airports and train stations by 2015. The new chain will be branded “Thalia Pocket Shop”, and the first two stores will open early in 2012 in the new Pier A-Plus at Frankfurt Airport, with a third following in the summer in Berlin Brandenburg International.

The shops sell only a small selection of paperbacks and are aimed at travellers who want to grab quality reading material before boarding. “Pocket Shop is a unique concept with a focus on the combination of retail business in the travel environment, the sale of paperback books, and attractive shops,” says Per Sjödell, CEO of Pocket Shop. Thalia spokesperson Mirjam Berle adds: “Our goal is to be there for our customers at any time and any place, so we go where our customers are – including online – and in the future, with Pocket Shop, even to high-frequency travel hubs.”

But even though Thalia is making a major bet on paper with Pocket Shop the company isn’t forgetting tech. “There are travellers who like to take their bookshelves with them in electronic form and others who prefer a thick paper tome,” says Berle. “We service both as we will have printed books in the stores as well as our own eReader, OYO.”

04 THE PRESS MAKERS

Heidelberg - Heidelberg, Germany

Two exemplary organisations investing in the craft and graft of fine quality print.

The print media industry might be having a bumpy ride, but Heidelberger Druckmaschinen is looking to the future from the strength of a long past. Building printing machines for 161 years, the company is the leader in this small but important market.

“We were internationally active long before globalisation,” says Jürgen Grimm, senior vice president of product marketing. “And you can’t do better than German precision. It’s part of our cultural heritage.”

In the company’s main production facilities in Wiesloch, just outside Heidelberg, print machines – which can work with one to 12 colours – are assembled. The latest is the gargantuan Speedmaster XL 162, a high-end offset printer capable of churning out 15,000 sheets an hour, at which point “paper becomes almost liquid,” says Grimm.

An operator works a digital console on a control platform in front; the machine extends back 30 metres and weighs 200 tonnes (it also costs about €4.5m). As big as it is, its matt black covering and shiny chrome catwalk (allowing workers to access rollers and ink elements) has a sleek sexiness to it. “After all, 5 per cent of the decision to buy a printing machine is based on design,” says Adriana Nuneva, senior VP of global marketing and communications.

Heidelberg has always looked beyond Europe – it’s been active in Japan for nearly 90 years, China for 40 years, and in Brazil for 20 – and has long been at the forefront of know-how and technology. Its Print Media Academy in central Heidelberg teaches courses in optimising print processes. Eight per cent of the company focuses on R&D, including a pre-development division that collaborates with universities such as MIT on innovations ranging from textured surfaces to embedded LEDs.

“The future of print media will head in two directions,” says Grimm. “Exclusive products with small circulations and high print quality on the one hand, and cheap mass products on the other.”

Why it works

1. Quick and effective corrections: After the 2008 economic crisis, Heidelberg was forced to reduce the workforce worldwide from 20,000 employees to around 16,000. This year its production figures are back in the black.

2. Innovation: Heidelberg has more than 5,000 patents worldwide, and in 2009, the company became the first manufacturer of carbon-neutral printing machines. It also cooperates with firms such as Apple, whose packaging is printed on its machines.

3. Durability: The average Heidelberg print machine lasts 20 years. The company gets reports of machines dating as far back as 1915 that are still in use.

05 THE MUSIC STORE

TITLE - Sydney, Australia

Pile ’em low, and sell ’em for what they’re worth. It works.

By the time Steve Kulak opened the first TITLE shop in Sydney in 2005, he had already earned three university degrees, spent more than a decade hitchhiking around the globe and built the home he now lives in – with his own hands.

So how did this fast-talking business autodidact end up presiding over a growing chain of seven – soon to be 10 – retail outlets selling high-end vinyl, CDs, books and DVDs in an age when iPods and their iCousins have driven giants such as Tower Records and Borders out of business?

There are two things to understand, says Kulak: humans are tactile and they will pay to interact. “You can choose to drink beer at home and buy it cheap or you can go down to the pub and pay $8 (€5.5) for a glass,” he says. “Before you talk about your mix of stock, before you do anything you have to think, ‘Why have I got a retail shop?’ Because what you’ve got is a social hub.” TITLE is not breaking new ground, Kulak says. People have sold mixed-media stock before and failed, yet they flock to TITLE.

So how does Kulak, who says he has never advertised, keep people coming into the shop? His managers know 60 per cent of their customers by first name, he says. He’s defiant about stock, choosing only items that “define the cultural space”, regardless of their saleability. “Do you know how many copies of James Joyce’s Ulysses we’ve sold in any of our shops? None. Is it in every shop? Yes.” Somewhat ironically, then, Kulak blames the decline of the industry giants on trying to do too much – selling everything they could pack under one roof, regardless of whether it was appropriate to their customers’ tastes – which he thinks consumers saw as a breach of trust and, ultimately, insulting.

So, where is TITLE going? When Monocle visited, the shop in Surry Hills was expanding into an adjacent storefront, which will hold the burgeoning fashion and print wings of Kulak’s empire.

“As the majors and other retailers fail, we see that as an opportunity to fill the space. This might seem clichéd, but we feel like we’re cultural ambassadors. A writer writes a book, that writer wants to see that book on the shelf. And that’s what we love to do. I think the commercial side of the idea is secondary.”

Title by numbers

First shop opened: 2005

First Location: Surry Hills, Sydney

Current Shops: Seven, with three more on the way

Stock: Vinyl (15 per cent of business) books (30 per cent), CDs (30 per cent) and DVDs (25 per cent)

TITLE Brands: TITLE (retail), Remote (fashion), Fuse Music Group (record label), Strangelove (Magazine)

Title by people

Dave Curran, 48, has been with TITLE since the first shop opened, both as a sales clerk and in the wholesale department. It is the calibre of the customers that keeps him from bolting TITLE for one of its large competitors dotting the city, he says.

“I worked in music stores a lot during the 1990s – Tower Records in the UK for a long time – and I came back here and worked in a lot of music stores. Back in those days it was sort of like you sold all kinds of music to everybody, whereas this is probably more of a specialised thing and the customers are a lot more discerning,” he says.

Working in the wholesale business, Curran is able to help shape the stock, which in turn allows him to mold the demographic entering the shop.

“They’re the kind of people I would like to get to know. You always have some of those customers in a broader music store, but you’ve got to sell all manner of things and not so much the kind of things you like. Whereas this store is filled with the things that we like.”

Title by titles

Vinyl:

David Bowie: Stationtostation
The Secret Museum of Mankind: Central Asia Ethnic Music Classics: 1925-1948
Various Artists: Southern Funkin’
London is the Place for Me: Trinidadian Calypso in London 1950-1956

Books:

06 The radio station

Spanish-language radio

Los Angeles, USA

While US radio fights for funding, Spanish-language stations serve their listeners to a T.

Spanish-language radio is booming in the US as the Hispanic population increases. In California, for instance, Latinos made up a majority of under-18s in 2010. The number of these stations has increased from around 200 in the early 1990s to more than 1,000 today.

“In the majority of states you can now find Spanish-language radio,” says Alan Albarran, a media professor at the University of North Texas. Two factors seem to explain the soaring listener numbers, he says. There is less fragmentation of the market, so – despite a greater number of stations – many listeners are tuning in to the same major stations, and older listeners tend to be less technologically oriented, so are not moving to internet radio providers such as Pandora.

One of the nation’s top Spanish-language DJs is Eddie “Piolín” Sotelo (pictured above), whose uplifting morning show on KSCA in Los Angeles is broadcast on 56 other stations across the country, from Reno, Nevada to Little Rock, Arkansas. His show, Piolín por La Mañana, has featured interviews with Barack Obama and Will Smith, and is renowned for leading the discussion on all things related to immigration – with good reason.

Piolín was once an undocumented immigrant in the US, having moved from Mexico in 1986. He came close to deportation in 1995, but managed to get a working visa and has now become a US citizen.

“This is what I believe – when you have a lot of people who are working every day, they’re responsible, pay taxes, are learning the language and are good citizens, they should have the opportunity to be legal in this country,” he says. “I’m blessed to be legal.”

Employment: In the past decade,25 per cent of daily newspaper newsroom staff lost their jobs.

Advertising: Total advertising revenue at US daily newspapers fell from $49.4bn in 2005 to $27.6bn in 2009.

Sales: The San Francisco Chronicle sold on average 527,466 copies in 2001 and 235,350 in 2011.

Revenue: More than 90 per cent of the US newspaper industry’s revenue still derives from print but each day the format is attracting fewer consumers and advertisers.

Closures: Newspaper closures in the US in 2009: 142.

Readership: 1.7 billion people read a daily newspaper – equal to 25 per cent of the world’s adult population. If you include non-dailies, this figure increases to 37 per cent.

Growing markets: Over the past five years, the total global paid-for daily newspaper circulation rose 5.7 per cent. It was up 30 per cent in Africa, 13 per cent in Asia, 5 per cent in South America. In the same period figures fell 10.6 per cent in North America, 7.9 per cent in Europe, and 5.6 per cent in Australia and Oceania.

Most avid readers: The world’s largest market for newspapers is India with 110 million copies sold daily.

Dominie Press, Singapore

Dominie Press used to produce four-colour work on a one-colour machine. Thirty years on, the family-owned, Singapore-based company has won D&AD Yellow Pencil awards for its unusual printing techniques for clients including Porsche and Werk magazine. Dominie’s founder and CEO Oh Teng Hin says that methods such as in-house smokescreening, or bullet-holed and burnt effect, provide an interesting edge in a traditional market.

The key to success, Oh says, has been establishing a niche among his clients, who hail from Australia and Asia to Europe and the States. “The printing industry in Asia is getting smaller – but there’s still a market for very special books, which means that our not-very-high-tech but creative business keeps expanding.”

Illumination: LED lights embedded in print products.

Security printing: In which a print product can test user identity, for example.

Multimedia: In the far future, perhaps even print-based video.

Catalogues: In absolute numbers, fewer magazines and papers, far more product catalogues. “After the Bible and Koran, the IKEA catalogue is the world’s most widely printed product,” says Jürgen Grimm. This trend is set to continue.

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